If you are looking to buy a new ektorp sofa, some freebies storage bins, or lead role Meatballs at IKEA, budget more for your shopping trip. The international retailer saw its profit margin shrink during the pandemic.
Potential gains in fiscal 2021 from increased online sales were offset by lower sales numbers at stores, as many locations were closed during the lockdown as well as high global supply chain problems (including labor and transportation shortages). There was also material cost. According to Inter IKEA Group, the holding company for the IKEA brand and related companies.
Its profit stood at 1.4 billion euros (about $1.6 billion) in Fiscal 2021, down from 1.7 billion euros (about $2 billion) in fiscal 2020, a decline of about 18%.
Inter IKEA Group CFO Martin Van Dam said in a statement, “IKEA e-commerce boomed this year and now accounts for 26 percent of total retail sales. But stores sold only 775, compared to over 1 billion in FY19.” Million visitors welcomed.” “To keep products affordable and meet the changing needs of customers, we have invested heavily in the IKEA supply chain.”
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Although most of the lockdown has been lifted, IKEA retail locations have been allowed to reopen, the company is facing challenges, he said.
“While our costs have increased, we did our best to keep prices stable for our retailers in FY2011,” Van Dam said. “While we cannot continue to secure fixed prices to retailers in these challenging circumstances, we plan to absorb part of the increased cost during FY22 as well.”
The main part of that sentence is that IKEA can only absorb “part” of the higher costs this fiscal year. This means that customers will see a higher price. How much will depend on how many hits IKEA’s respective divisions and its core franchises are able to take.